Business Council names Victoria worst state for business, again

The peak business body has again branded Victoria the worst Australian jurisdiction to operate in, because of its relatively high taxes and complicated licensing rules.The Business Council's "regulation rumble", an annual ranking of state and territory policies, has placed the state last every year since the first edition in 2023. South Australia has topped the list every year, and did so again.Bran Black, the lobby's chief executive, said Victoria "continues to face serious challenges" and that its "high taxes and unnecessary regulation" were factors in the state's sluggish economy and high unemployment.Victorian Premier Ben Carroll has attempted to reposition the 12-year-old Labor government as pro-business after taking the leadership in the final months before the November election.Tax down? Top rankingThe ranking represents the Business Council's subjective assessment of favourable business policies. States are rewarded for lower taxes on payrolls and on land, whether via land taxes or stamp duties.They are also rewarded for approving planning applications faster, making licensing simpler, and making workers' compensation and insurance cheaper.While the rankings have not changed much over four years, several jurisdictions have improved their standings by streamlining their planning systems as part of nationwide efforts to boost housing construction.While Victoria is streamlining planning approvals through its 'Better Decisions Made Faster' laws, this was not factored into the rankings because the legislated reform does not take effect until 2027. The council noted the laws would likely see improvements.Southern lightsSouth Australia's strength in the rankings comes chiefly from its payroll tax, which has the lowest average rates. It is also the only jurisdiction to adjust the thresholds for payroll tax for inflation. The Business Council says payroll taxes discourage job growth.The state is also rewarded for its simplified licensing system, a particular concern for the Business Council. Whereas the most complex state, Tasmania, had 38 separate hoops for a cafe owner to set up shop, South Australia had far fewer.The Northern Territory bolstered its standing because of its efforts to speed up approvals. New South Wales also sped up its planning system, but its system remains among the most complex and is still wracked with delays. The state ranks fifth overall.South Australia came at the top of the table, as it has for each of the four years the rankings have been published. (ABC News: Carl Saville)The ACT ranks highly because it does not levy land tax on commercial property and has relatively low stamp duties. The council does not differentiate between the two types of property taxes, although economists say stamp duties are less efficient.Queensland and Western Australia are ranked sixth and seventh, Queensland penalised chiefly for its heavy restriction on retail trading hours, its disparate planning rules and its high land taxes, and Western Australia for levying payroll tax on smaller businesses.Mr Black said businesses were "buried under mountains of red tape" across Australia, which was "wasting time and money", but saw some bright spots, especially from the wave of planning reforms."Everyone can lift their game by learning from what others are doing well … There's a lot to be optimistic about. Reform is starting to land," he said, adding that the federal government was also working across jurisdictions "to even out the rules".Business wooed ahead of state electionBoth major parties in Victoria have promised to lift the land tax-free threshold, rolling back changes made in 2024 by former premiers Daniel Andrews and Jacinta Allan, which captured an extra 250,000 Victorian workers.Labor's proposed wind-back would be slower than that of the Coalition, which has also pledged to remove payroll tax for private schools and remove stamp duty for first homebuyers.Victorian Opposition Leader Jess Wilson and Premier Ben Carroll have both offered forms of payroll tax relief. (ABC News)Opposition Leader Jess Wilson has promoted both lower taxes and lower debt as part of her election pitch, though several economists have raised doubts about her "contradictory" policies."We have to get business back at the centre of the economy, investing and creating jobs in this state," Ms Wilson told a business lunch on Tuesday for the Victorian Chamber of Commerce and Industry."I want to keep working with you to find competitive advantages and maximise growth and jobs," Mr Carroll told the same forum.While the Coalition needs to overcome a 16-seat deficit to form a majority government, polling suggests Ms Wilson is most likely to be victorious next month.The rankings, from best to worstSouth AustraliaTasmaniaAustralian Capital TerritoryNorthern TerritoryNew South WalesQueenslandWestern AustraliaVictoria